Rug Pull
A scam in which the creators of a crypto project suddenly withdraw all liquidity or investor funds and disappear.
A rug pull (literally "pulling the rug out from under someone") is a form of scam in which the creators of a crypto project — usually a new, little-known token — suddenly withdraw the accumulated liquidity or funds deposited by investors and disappear, leaving the token worthless.
Warning signs include: an anonymous team with no trace of prior activity, no smart contract audit, unrealistically high promised returns, and a large share of tokens concentrated in a handful of wallets that could dump them on the market at any moment.
Related terms
Airdrop
A free distribution of tokens by a crypto project to users' wallets, usually as a reward for prior activity.
DeFi (Decentralized Finance)
An ecosystem of financial applications running on blockchain via smart contracts, without banks or other central intermediaries.
Whitepaper
A technical and business document published by the creators of a crypto project, describing its technology, purpose, and how it works.
Smart Contract Audit
An independent security review of a protocol's code, checking for bugs or vulnerabilities before (or after) it goes live with real user funds.